"Bigger retailers in the US and the EU are extremely conscious of any adverse publicity, especially with quotas having been phased out."

Anil Sasi

New Delhi, Jan. 2

TEXTILE exporters better be on their guard. Big US retailers such as Wal-Mart and JC Penney have started conducting `spot audits' on their Indian suppliers to check instances of child labour and ensure that labour standards being used conform to stipulated norms.

According to industry sources, these checks are, over and above, the mandatory social audits conducted annually by the bigger retailers on their supplier base in India and other countries such as Pakistan and Bangladesh.

Inspection teams representing the US retailers in the country, or their respective agents stationed here, are conducting checks on the facilities of their suppliers and the inspections are expected to gather momentum as the decades-old quotas get phased out, industry representatives said.

"Bigger retailers in the US and the EU are extremely conscious of any adverse publicity, especially with quotas having been phased out," a KSA Technopak executive said.

According to an industry expert, the `sweat shop' issue has always been a sensitive subject in developed markets and retailers in the developed countries are taking a safe approach, since outsourcing has been raised as a big issue by domestic industry lobbies in the developed markets.

"With concerns that swelling textile imports from China and India are going to destroy whatever is left of the US textile industries, a number of industry bodies and non-governmental organisations (NGOs) in the US are expected to be on high alert to check issues such as labour conditions at suppliers' facilities," an industry player said.

This is especially so in case of Indian suppliers, since the US, EU and other WTO members can restrict Chinese textile imports by invoking provisions in China's entry agreement to the WTO.

According to the Special Textile Safeguard Provisions, which have been made part of China's accession agreement to the World Trade Organisation (WTO) signed in 2002, members of WTO can retain safeguard measures in the form of quantitative restrictions to products where `market-disruptive' surges of imports from China have been observed. The US administration has already buckled under pressure from domestic textile manufacturers seeking protection against Chinese imports.

The administration's efforts at initiating a clampdown on Chinese clothing and textile imports have, however, met with a temporary roadblock with a US Federal Court in New York issuing an injunction against the administration taking up petitions from domestic lobbies seeking to restrict Chinese textile imports.

"It is only a matter of time that restrictions on Chinese import would be in place in the US. In case of Indian exports, the efforts of US industry groups would be to use labour issues, as well as sanitary and phyto-sanitary measures, to block shipments, now that quantitative restrictions have been phased out," an exporter said.

(This article was published in the Business Line print edition dated January 3, 2005)
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